So while we are paying down debt, saving money, and getting ourselves situated to start buying property I've been reading, learning, researching etc. So many SFH's that are "affordable" are in areas with higher crime and or lesser schools. I know these should be avoided, but what about "lowest crime" areas (according to Trulia) that have "not so great" schools. Are these good bets, or do I really need to look at better areas. Also, are Trulia's estimates of crime and school quality accurate?
I've been nosing around the Kansas City areas and it looks like there are lots of good options, but the good school areas are EXPENSIVE with low cash flow numbers The areas with better cash flow have higher crime and/or poor schools. What's good in KC?
Why not look in areas like Raytown, Independence or Grandview? I have picked up rentals in those areas for around 50-60k including rehab and they rent for 850-900. These aren't particularly excellent areas, but they have decent schools and lower crime then the KC city properties.
@William Robison may want to weigh in on this one.
Raytown and Grandview are areas I was looking at. I saw "approaches standard" on the schools. Is that doable?
Independence seems all over the board. Lot's of houses. Lot's of CHEAP houses. Lots of foreclosures. Anyone know the reason for so many in Independence?
Should I look more at 50,000 range?
Updated over 3 years ago
OK.... looked around Independence some more. Wow! Worth more looking for sure!
Edith, I'd focus on Raytown and Independence - the schools are good and you can find good deals on properties that cash flow. I own and manage a large apartment complex in Kansas City wedged right in between Raytown and Independence and I'd be happy to help you out.
I invest in KC from out of state and am happy with it but doesn't IL have some good cash flow opportunities you can get into? If I had good opportunities in state I would not consider going out of state. Check out podcast #65, Wendel is investing in Chicago.
I live just North of Bloomington/Normal in the tiny town of El Paso The numbers aren't great that great the livable parts of Bloomington unless you can afford to get into apartments. (Someday!) Peoria or Pekin are areas I'm looking at. Also Streator. The numbers just aren't wonderful any closer. DH is not really interested in doing the property management anyway, so I thought we might as well look at the KC area since we visit so often. It would be more convenient to look at property there than 2+ hours away in Chicago.
Thanks for the thoughts! Keep em coming!
I'm in Peoria and buy and hold here in the very low income areas. I find my best deals and best ROI in those niches. Example, I have two side by side 3 Br 1Ba homes that I rehabbed and all in I'm at about 15k for each one. They both rent for $700 a month and tenants pay for all utilities etc.
This is my niche now and I just closed on my 6th SFR here on Wednesday.
I'm (so far) very happy with the deals I've been putting together!
Hello @Edith TenBroek
Thanks @Andrew Erpelding
Well, most of you have hit the nail pretty well in the conversation. There is a happy medium that can be achieved. My belief is that there is a hefty a.k.a. expensive premium to pay for A props over B props.
In your research about Independence for one thing, it has to do more with the high school. Part of the Independence school district is a fairly recent acquisition from the KCMO school district (unaccredited). Independence has three high schools and a wide range of neighborhoods. There is an area I like to call the fringe, which is immediately parallel to the urban core. This fringe area goes to Van Horn HS. To the east, there is Christman on the north central side and Truman on the south central side. These schools are average and good areas to invest. To the north east, there is Fort Osage which has slightly above average schools and solid demand. Within Independence, there are houses that range from 10k to 200k. The "sweet" spot, as mentioned before is about 50-60k for rent in the range of about 750-900.
Raytown is another solid market area with two high schools. There are some "no buy zones" that I have in this market area also...mostly included in the fringe side (closest to KCMO). Outside of that, there are houses from 30s to 180s in Raytown. Its all about the neighborhood. Zillow and Trulia do not get specific enough data to really find out that much about a neighborhood. I have zip codes in Raytown that have great areas that I would want to live and areas that I would not want to own rentals. There are only 15 blocks separating these two.
Its one thing to sell an investment property, but its another thing to inherit a headache property. With my management company, I do not want a headache, therefor, I work hard to keep my investors out of these areas. I have a lot invested in helping them get to the right decision also. In the end, its about happy clients that buy more and refer, so finding partners in market areas of interest that have a long term focus of quality service and products will have a major impact on success.
Here are some Independence examples:
Sold a HomePath house today with a 10% down loan. Price 77k. Rehab 16k. Rent about 1100. Best part is the ARV of 128k so the upside is built in for the long term.
Contracted a wholesale with a price of 73k turnkey. 88k ARV. Rent at 925. North East corner of Independence in Fort Osage schools, which is a bonus. At 15k in equity, you have plenty of strategies available if you need to exit.
Long story short, avoid the urban core and the fringe. They offer good cash flow numbers on paper, but they do not account for the significantly increased risk of bad tenants, vandalism, make ready costs, etc.
All the best with your investments. Feel free to ask specific questions if I can help you with answers.
@Steve Sanchez Any tennant issues in this niche in Peoria? Do you do your own property management?
@William Robison Are you a Realtor as well, or do you have any suggested investment friendly Realtors in the area?
@Edith TenBroek I am a real estate broker (agent). Ive been in real estate for 11 years. Ive owned my own brokerage since 2008. I really wear three hats:
Realtor-help with investor acquisition
Project Manager-coordinate the rehab process
Property Manager-fill leases, ongoing maintenance and client relations
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